Garner — U.S. Rep. Bob Etheridge (D-Lillington) today announced that he will introduce legislation to provide for $25 billion for school construction bonds.
Etheridge made the announcement at Aversboro Elementary School in Garner, which has 10 trailers and is 200 students above capacity. Following the announcement, Etheridge toured the school’s facilities to see the effects of crowding first-hand.
“This is a win-win proposal for our schools, our children and our communities. It will help us to build new schools and get our children out of trailers and into quality facilities where learning can flourish,” said Etheridge.
The America’s Better Classroom (ABC) Act of 2007 will provide a federal tax credit to bond holders to pay the interest on local school bonds. The state or school district would only be responsible for repaying the principal. The bill will provide federal support in partnership with local officials to leverage about $25 billion in bonds for school construction, which could provide millions in interest-free school construction bonds for new schools in North Carolina. The legislation will be deficit-neutral and will not result in new taxes or more borrowing from foreign countries. It will meet all pay-as-you-go requirements passed by the U.S. House of Representatives in January.
The bill is bipartisan and is sponsored by the Chairman of the House Ways and Means Committee. Etheridge introduced similar legislation in his first term in Congress a decade ago, and with the support of Chairman Rangel, the bill is poised for action. At the request of Etheridge, the budget resolution passed by the House for Fiscal Year 2008 includes a provision that would pave the way for Congress to approve legislation for tax credits for school construction bonds.
The bipartisan plan announced today would subsidize $25 billion in zero-interest school modernization bonds. The federal government would provide tax credits for the interest normally paid on a bond. Funds that local and state government entities would have used to pay bond interest would be freed for other education needs. North Carolina would receive approximately $448 million under the legislation.
For each $1,000 of school bonds, states or local school districts would save as much as $500 in total payments. The bill would provide $25 billion over the next two fiscal years for zero interest school modernization bonds. It also includes $2.4 billion for schools located in Empowerment Zones, Enterprise Communities or communities in which 35 percent of their students are eligible for free or reduced price school lunches as part of the Qualified Zone Academy Bond (QZAB) initiative.
The bill would allocate 60 percent of the $25 billion in school modernization bonds to states based on school-age population. The remaining 40 percent of these bonds would be directly allocated to the 125 school districts with the largest number of low-income students.